BILL NUMBER: AB 1456	CHAPTERED  09/16/99

	CHAPTER   413
	FILED WITH SECRETARY OF STATE   SEPTEMBER 16, 1999
	APPROVED BY GOVERNOR   SEPTEMBER 16, 1999
	PASSED THE ASSEMBLY   AUGUST 26, 1999
	PASSED THE SENATE   AUGUST 23, 1999
	AMENDED IN SENATE   JUNE 23, 1999
	AMENDED IN SENATE   JUNE 7, 1999
	AMENDED IN ASSEMBLY   APRIL 29, 1999
	AMENDED IN ASSEMBLY   APRIL 22, 1999
	AMENDED IN ASSEMBLY   APRIL 12, 1999

INTRODUCED BY   Assembly Member Scott
   (Coauthors:  Assembly Members Havice, Kuehl, Knox, and Romero)
   (Coauthor:  Senator Figueroa)

                        FEBRUARY 26, 1999

   An act to amend Section 779.36 of the Insurance Code, relating to
credit insurance.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 1456, Scott.  Credit insurance:  rates.
   Existing law governing insurance provides for the regulation of
credit life insurance and credit disability insurance.  Existing law
requires the Insurance Commissioner to adopt regulations by January
1, 1994, specifying prima facie rates based upon presumptive loss
ratios for each class of credit life, credit disability, joint life,
and joint disability insurance, as specified.
   This bill would extend from January 1, 1994, to January 1, 2001,
the time requirement for the commissioner to adopt these rules, would
change the rate requirements, as specified, and would expand the
scope of the rules to also include credit unemployment, credit
property, joint credit unemployment, and joint credit property
insurance.  This bill would require the commissioner to annually make
available to the public actual annual loss ratios under these
provisions.  It would also make several related changes.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:


  SECTION 1.  Section 779.36 of the Insurance Code is amended to
read:
   779.36.  (a) The commissioner shall adopt regulations that become
effective no later than January 1, 2001, specifying prima facie rates
based upon presumptive loss ratios, with rates which would be
expected to result in a target loss ratio of 60 percent, or any other
loss ratio as may be dictated after applying the factors contained
in this subdivision, for each class of credit disability, credit
unemployment, credit property, and credit life insurance.  The prima
facie rates shall be based upon loss experience filed with the
commissioner, aggregated by class.
   If any rate established under the commissioner's ratemaking
authority produces actual loss ratios that are lower than the
presumptive loss ratio, prospective rates may be adjusted, but no
retroactive refunds shall be required.  In order to provide insurers
an opportunity to earn a fair and reasonable rate of return, the
commissioner in the ratemaking process shall consider the following
factors:  acquisition costs, including commissions and other forms of
compensation, expenses, profits, loss ratios, reserves, and other
reasonable actuarial considerations.
   (b) The commissioner shall provide for rate deviations.  Upward
and downward deviations shall be considered by the commissioner upon
initiation by the department, or at the insurer's request at the time
of review of annual experience reports filed by insurers, or as
provided by regulations pursuant to Section 779.21.  Requested
deviation rates shall be deemed approved if not disapproved within
120 days after submission to the department for approval.  Creditor
and agent compensation shall be based upon the prima facie rate, and
shall not be affected by a deviated rate pursuant to this
subdivision.  This subdivision does not prohibit an insurer from
paying compensation that is less than the prima facie rate.
   (c) The commissioner shall adopt regulations that become effective
no later than January 1, 2001, specifying prima facie rates based
upon presumptive loss ratios, with rates which would be expected to
result in a target loss ratio of 60 percent, or any other loss ratio
as may be dictated after applying the factors contained in this
subdivision, for each class of joint life insurance, joint disability
insurance, joint credit unemployment insurance, and joint credit
property insurance.  Those rates shall be expressed as a multiple of
the prima facie rate for each class of insurance subject to
subdivision (a), and shall be based upon loss experience filed with
the commissioner, aggregated by class.
   If any rate established under the commissioner's ratemaking
authority produces actual loss ratios that are lower than the
presumptive loss ratio, prospective rates may be adjusted, but no
retroactive refunds shall be required.  In order to provide insurers
an opportunity to earn a fair and reasonable rate of return, the
commissioner in the ratemaking process shall consider the following
factors:  acquisition costs, including commissions and other forms of
compensation, expenses, profits, loss ratios, reserves, and other
reasonable actuarial considerations.
   (d) Loss ratios shall consist of the ratio of incurred losses to
earned premiums in a specified reporting period.
   (e) The commissioner shall, on an annual basis, make actual annual
loss ratios under subdivisions (a) and (c) available to the public.
